Thursday, March 10, 2011

Excess Reserves at Commercial Banks on March 9, 2011

New Federal Reserve statistics just released indicate that the Reserve Balances of commercial banks at that Federal Reserve increased by more than $83 billion this week to come in just short of $1.4 trillion on Wednesday March 9.

Excess reserves in the banking system averaged just under $1.3 trillion for the two banking weeks ending March 9. This figure tends to trail the Reserve Balances number because it is a 14-day average.

The Reserve Balances at the Federal Reserve are up over $360 billion since December 29, 2010 and up about $400 billion since September 22 just after Ben Bernanke warned the world that QE2 was on the way.

Bank Reserves have increased by 41% since that September date.

Note that on August 22, 2008 the total assets held by the Federal Reserve totaled $925 billion so that the increase in Reserve Balance from September 22, 2010 to March 9, 2011 of almost $400 billion represented 43% of what total Fed assets were before the financial crisis in the fall of 2008.

The $1.4 trillion in Reserve Balances are one and a half times the amount of assets held by the Federal Reserve on August 22, 2008.

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